With purchase financing and adjustable-rate business leading the way, mortgage activity dropped during the holiday week. Meanwhile, mortgage rates continued their descent to depths not previously seen and are poised to establish even more new records.
Loan originators pulled 9 percent fewer pricing inquiries than last week, leaving the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended June 1 at 199. The index was also lower than a year ago, when it stood at 212.
The decline was the result of the Memorial Day holiday. The upcoming longer work week — as well as plummeting mortgage rates — is likely to drive business higher in the next report.
Purchase financing took the biggest hit, falling 13 percent from a week earlier. Purchase business was down 40 percent from this week in 2011.
As prospective borrowers flocked to record-low fixed rates, fewer opted for adjustable-rate mortgages — with ARM share slipping to 4.05 percent from last week’s 4.16 percent. ARM share was much higher a year earlier at 9.5 percent.
ARM activity tumbled 12 percent from last week, and ARM inquiries have plummeted 60 percent over the past 12 months.
Inquiries for mortgages insured by the Federal Housing Administration fell 10 percent and were down a quarter from the week ended June 3, 2011. FHA share declined to 20.1 percent from 22.4 percent seven days earlier and a quarter a year earlier.
Conventional activity mirrored overall activity, falling 9 percent from the previous report. Conventional business was off 3 percent from this week last year.
Eight percent fewer borrowers were out shopping for a refinance this week than last week, though refinance inquiries were up nearly a quarter from a year ago.
The Federal Housing Finance Agency, which regulates Freddie Mac and Fannie Mae, reported Friday that the two housing finance agencies’ refinances totaled 1,178,419 in the first quarter, increasing from the fourth quarter’s 1,029,610. In the first-quarter 2011, refinance transactions totaled 1,016,427.
Refinances processed under the Home Affordable Refinance Program grew to 180,185 from 93,190 three months earlier and 130,209 a year earlier, FHFA reported. Loans in excess of 125 percent loan to value accounted for 4,434 first-quarter HARP refinances.
Refinance share inched up to 70 percent from 69 percent and was 53 percent in the same week a year prior. The latest refinance share reflected a 57 percent rate-term share and a 13 percent cashout share.
The best performing category in the most recent report was jumbo, with inquiries for loans in excess of $417,000 off just 7 percent for the week. The difference between jumbo rates and conforming rates deteriorated to 61 basis points from 58 BPS. The jumbo-conforming spread was only 52 BPS in the year-earlier report.
The 30-year fixed-rate mortgage continued its trek deeper into record territory, averaging 3.84 percent versus last week’s average of 3.87 percent. The 30 year was 4.65 percent 12 months ago.
Borrowers shopping for15-year mortgages were quoted rates that were 73 BPS better than 30-year loans, a little better than the 72-basis-point discount being quoted in the previous report. The spread was 77 BPS a year previous.
The yield on the 10-year Treasury note averaged 1.68 percent during the period encompassed by this week’s Mortgage Market Index, according to Treasury Department data. But this week has been hugely volatile as a result of concern about Spain’s banking system, Greece’s commitment to austerity promises and today’s dismal U.S. employment report.
As a result, the 10-year Treasury yield closed at the lowest level on record based on the oldest available Federal Reserve Board data:Â 1.47 percent.
The Treasury market activity suggests that mortgage rates could be approximately 21 BPS lower in next week’s Mortgage Market Index report.
